The current global concern around Coronavirus disease 2019 (COVID-19) has drawn significant attention to how best to contain its spread. Many believe that the wearing of surgical face masks is the best protection against the virus, but, as recommended by the World Health Organisation ("WHO"), the best protection methods are to maintain a high level of personal hygiene through frequent washing of hands, cover the nose and mouth when sneezing/coughing and wear masks only in specific circumstances (e.g. in close proximity to an infected person).
Despite this, the public have clamoured to arm themselves with face masks. The global press has reported on this unprecedented run on face masks in Mainland China and Hong Kong (and globally) which has resulted in a significant lack of availability. Given the demand, it is not surprising that there are widespread reports of counterfeit masks being sold online and in physical shop premises.
This article discusses the key IP and regulatory issues relating to surgical masks and penalties for the production of counterfeit products.
What are the surgical mask specifications?
Surgical masks are specialist pieces of medical equipment designed predominately for use in the hospital environment to protect patients and healthcare staff from spreading and contracting disease. In general, a basic surgical mask has three layers: the innermost layer is used for absorbing moisture (from the wearer’s breath, cough, sneeze etc.), the middle layer is a filter (for particles and infectious agents) and the outer layer repels liquid (e.g. water, blood etc.). There are varying levels of quality for surgical masks and the extent of protection depends on the specifications of manufacture. To ensure the quality and protection of these products, relevant standards exist for their manufacture. As an example, two regularly cited standards are the EU and US standards:
To demonstrate what these standards mean for mask performance, a EN14683 Type II/ASTM level 1 mask will need to meet the following specifications:
There are also Chinese Standards for surgical masks (GB 19083-2010 Technical Requirements for Protective Face Mask for Medical Use, YY 0469-2011 Surgical Masks) that provide the mandatory specifications for these products in China.
As evidenced by these standards, the manufacturing of a surgical mask must be undertaken with some degree of precision. If the product does not meet these specifications, they may not function as required and place the wearer at significant risk.
What are the regulatory requirements for surgical masks?
Surgical masks are regulated as a medical device in Mainland China but, while they are also classed as a device in other parts of the world, there are no specific legislative requirements for the regulation of medical devices in Hong Kong.
For China, the “Medical Device Classifications Catalogue” (effective 1 August 2018) lists both surgical mask (141304) and protective face mask for medical use (141401) as Class II medical devices. This classification places legislative requirements on the product in terms of specifications, license to manufacture, quality control and recording of business operations. In addition, if the products are to be sold online, there are now also specific measures that must be taken to offer online sales of medical devices.
Enforcement action to tackle counterfeit surgical masks
Given the potential risk associated with surgical masks that do not meet the stated requirements, there is a general concern by governments and manufacturers that fake or counterfeit products may infiltrate the market. As local media in both Hong Kong and Mainland China continue to report instances of counterfeit masks being found for sale on major online platforms and retail outlets, the government in both jurisdictions have been quick to respond. In Hong Kong, customs officers launched a territory wide operation (codename – Guardian) on January 30 to inspect retail locations selling surgical masks. This resulted in the seizure of 68,000 suspected counterfeit masks at one location and the arrest of the shop’s proprietor. Similar counterfeiting issues have been evident in Mainland China. One example in recent weeks was the seizure of 50,000 fake masks in Yiwu, a manufacturing hub in the eastern Zhejiang province.
Against this background, we examine enforcement options legitimate mask manufacturers may have against counterfeit products, and the penalties which exist for companies making counterfeit masks.
In Hong Kong, while there is no relevant regulatory provision for surgical masks, there are several relevant pieces of legislation related to trade and the consumer.
Trade Descriptions Ordinance (TDO) Cap 362
The TDO makes it an offence to use false trade descriptions for products in Hong Kong (e.g. falsely claiming compliance to a standard specification). Part 2 of the TDO states: “any person who supplies goods with a false trade description in the course of trade or business, or is in possession of any goods for sale with a false trade description, or sells or possesses for sale any goods with a forged trademark commits an offence. The maximum penalty upon conviction is a fine of HK$500,000 and imprisonment for five years”.
The Consumer Goods Safety Ordinance (CGSO) Cap 456
The CGSO also has provisions under its Part 2 that make it “an offence to supply, manufacture or import into Hong Kong consumer goods unless the goods comply with the general safety requirements for consumer goods. The maximum penalty upon conviction is a fine of HK$100,000 and imprisonment for one year on first conviction, and HK$500,000 and imprisonment for two years on subsequent conviction”. The CGSO also requires that, if a standard exists, the goods are required to meet that standard to be manufactured, supplied or imported into Hong Kong.
The Trademark Ordinance (TMO) Cap 559
The TMO carries penalties for the infringement of registered or well-known trademarks. The infringement of a registered trademark in Hong Kong occurs if a person who is not the owner (or licensee) uses “in the course of trade or business a trade mark identical or similar to the registered trade mark in relation to identical or similar goods or services”. As a trademark infringement is a civil wrong, the owner of the mark may be entitled to damages, injunction, destruction of the offending goods or delivery up of the goods.
For an unregistered trademark, the owner of the mark is able to instigate proceedings against the infringer under the common law rule of passing off. This action occurs when another person unlawfully misrepresents that their product or service is that of another person. This can often be through the use of another’s brand name, trademark or packaging etc. Under the common law, a person must prove three elements to demonstrate passing off:
Similar to a registered trademark owner, the owner of the unregistered mark may be entitled to damages, injunction, destruction or delivery up of the goods.
In Mainland China, there are several legal provisions which can potentially be relied upon against counterfeit surgical masks.
Medical Device Regulations
The Regulations on Supervision and Administration of Medical Devices prohibit the sale of unregistered medical devices and institute penalty provisions for failing to register a medical device, manufacturing in an unlicensed facility and selling unregistered devices (fines of RMB50,000-100,000 if the total value of illegal products is under RMB10,000 or 10-20 times the value of sales if more than RMB10,000; and possibly a bar on applications for 5 years). These regulations also have penalties for the false advertising of medical products (e.g. making false claims of product effectiveness).
A counterfeit product is, under the law, deemed to be an unregistered product.
PRC Product Quality Law
The PRC Product Quality Law makes selling a counterfeit surgical mask a potential legal violation. Producing or selling a product that does not comply with national standards, or industrial standards for ensuring human health and personal safety can result in the confiscation of product, the issuing of a fine (up to 3 times the value of all illegal products) or potential criminal liability.
This law also contains penalty provisions if there is fabrication or fraudulent use of certification marks or other quality marks (confiscation of product and any illegal gain, a fine up to the total value of the illegal products and potential revocation of the business license).
PRC Ecommerce Law
The PRC Ecommerce Law that came into effect in January 2019 makes it illegal to sell products that do not comply with specified safety requirements and also for products that infringe on another’s IP rights (patents, copyright, trademarks).
PRC Criminal Law
The PRC Criminal Law contains penalties for producing/selling counterfeit products. Specifically, there are penalty provisions for counterfeiting registered trademarks and forging or making others’ registered trademarks and logos. A significant element of the law is that there are penalties for producing and selling fake or substandard commodities and for selling medical devices that do not comply with the national or industrial standards for safeguarding human health.
These latter two penalties carry more severe punishments if they occur during periods of prevention and control of sudden infectious diseases. The penalties are imprisonment and fines equivalent of 0.5 to 2 times the sales amounts or confiscation of property.
PRC Trademark Law
The PRC Trademark Law makes it an offence to use and/or sell goods that violate another’s exclusive trademark. There are both Civil and Administrative actions that can be instigated against an infringer. Under the Civil provisions, the court can order the infringing entity to cease manufacture/distribution etc. and pay damages and also order punitive damages up to 5 times the infringement amount.
Under the Administrative provisions, there is potential for the infringement to warrant criminal investigation if the market regulation administration deems it a crime. Other penalties can be confiscation and destruction of the counterfeit items and tools used to manufacture and a fine of either up to 5 times the illegal turnover if turnover is > RMB50,000 or up to RMB250,000 if turnover is < RMB50,000.
PRC Anti-Unfair Competition Law
The PRC Anti-Unfair Competition Law makes misleading buyers and false representations a violation of the law. For misleading buyers, a business operator shall not use the marks, names, packaging etc. of another so as to confuse their products with those of well-known brands/products. The penalty for such violation will depend on where the case is filed. The statutory damage is up to RMB5 million if filed with the court (although, the final damages may be higher if supported by evidence), or up to 5 times the illegal turnover if turnover is > RMB50,000, or up to RMB250,000 if turnover is < RMB50,000 and potential revocation of the business license. Under the false representation provision, a business operator shall not attempt to mislead consumers about a product. The penalty levied by the market regulation administration may be an order to cease illegal acts, and impose a fine of RMB200,000 up to 1 million. For serious cases, a fine of RMB1 million to 2 million may be levied and the business license could be revoked.
What does this mean for manufacturers?
Surgical masks are more than just simple material that cover the nose and mouth; they are precise products that are required to meet certain specifications in order to provide sufficient protection. For this reason, counterfeit surgical masks have the potential to expose wearers to significant harm should they be manufactured to substandard specifications. As only certain products meet these requirements, manufacturers of these products do not wish to see their logos or names associated with substandard and counterfeit products.
Counterfeit products will often look like the real product and will use logos, emblems and registration numbers/certifications in an attempt to look like the real product. However, with surgical masks, the counterfeit products will not offer the same protection as the real product.
The important point for manufacturers to note is that there are mechanisms in place in both Mainland China and Hong Kong that can protect their trademark and product name should they become aware of counterfeit products. As stated above, there are severe penalties for using another’s trademark or selling counterfeit products.
Bird and Bird have significant expertise in the protection of trademarks and the institution of anti-counterfeiting claims in both Mainland China and Hong Kong. Please contact us if you require further information on these topics.